Verizon to enter business long-distance

Verizon's impending entry into the business long-distance market might not accelerate the decline in the cost of telecom services, but it will give customers another financially stable provider to which they can turn, experts say.

"We will compete on price where we have to, but for the most part we will compete on product and value," said Ivan Seidenberg, Verizon's president and CEO, announcing the move last week.

The incumbent local service provider in the Northeast, Verizon is taking aim at business telecom leaders AT&T, WorldCom and Sprint with its plans to enter into the business voice and data long-distance market. Verizon will launch services to customers in the Northeast in the first quarter of next year and roll out nationally to 56 markets during the next two years.

Verizon has a significant presence in a number of metropolitan areas outside its local service territory that the former GTE served. Verizon was formed in 2000 by the merger of Bell Atlantic and GTE.

Verizon's Business Solutions group will spearhead its business initiative. Business Solutions, which sells integration and network services to large businesses, employs about 14,000 people and has annual sales of $7 billion. The enterprise services, which will be marketed under the name Enterprise Advance, will include network management, data storage, business recovery and security in addition to basic voice and data services.

Under the Telecommunications Act of 1996, Verizon and the other regional Bell operating companies - BellSouth, SBC Communications and Qwest - were prevented from offering long-distance services in their local service territories until they had proven that they opened their telecom networks to competitors.

Verizon has won approval to offer long-distance services in all of its 15 local service areas except three - Maryland, West Virginia and the District of Columbia. Verizon officials say the company will wrap up approvals for those areas during the next several months.

The company has offered long-distance services in many of its local states for more than a year. But until now, it has concentrated on the consumer and small-business markets. In some states, Verizon has managed to snap up as much as 30% of the consumer long-distance market.

Verizon shouldn't have much trouble drumming up long-distance customers in the large-business market, says Thomas Nolle, president of consulting firm CIMI and a Network World columnist.

"We've done surveys that show that in the enterprise market the RBOCs have as good a perception [among customers] as the interexchange carriers," he says.

Large businesses are especially concerned about turning to interexchange carriers now, Nolle says, given the poor financial health of companies such as WorldCom. By comparison, Verizon looks like a safe haven, he says.

One area where Verizon will face a challenge is in deciding what kind of core network to build.

"If they're too conservative there's a risk of not building a network that can take full advantage of new IP services," Nolle says. "And if they're too revolutionary, they could have trouble supporting legacy services like frame and ATM."